Confessions of a Shopaholic is hilarious. It’s also, often, far too close to the bone. There’s a scene where Becky- debt-ridden shopaholic masquerading as a finance journalist- gets invited to a function. Immediately she thinks about buying a new dress. Her long-suffering best friend manages to convince her that she can probably wear one that she already owns (she has many). Even when Becky concedes that, immediately she jumps to new shows, new accessories and updating her makeup. This is despite her $16 000 of debt.
Ouch. There’s a little part of me that withers every time I watch that scene, because I can see myself up there. The lack of discipline, the continual justifications of expenditure, the refusal to look at bills. Becky is an exaggerated character (humor demands it). But the ring of truth is not one you can ignore. Here’s what I learned from the silver screen.
Prepare for the worst
Becky’s debt problem only becomes an immediate issue because she loses her job. Up until then, she has managed (barely) to keep her head above water. Prepare for the unexpected and have a little financial fat to cope with it. Commentators suggest you should build up an emergency fund before you start paying off debt. It may seem counter-intuitive but having three month’s wages in the bank may save your bacon should things turn pear-shaped.
Confront your expenditure
Don’t hide bills under pillows, mattresses, large vases or on the top of wardrobes. Keep an expenditure diary, and write everything you spend in it. Having a budget is important, but unless you are honest with yourself about what you’re spending, you’ll perpetually be confused as to where the money went.
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Don’t let interest snowball your debt
Interest is the enemy of peace and love. While you may have been able to cope with the original debt incurred, if you don’t pay it back efficiently, the interest will eventually make the debt almost impossible get rid of. Aim to pay back over and above your minimal repayments to avoid snowballing debt.
Honour your debts (financial or otherwise)
Becky does some less-than appealing things in the course of the film to cover up her mounting debts. She lies to her employer, consistently let’s her best friend cover her rent and threatens her parents’ life savings. If you owe someone money, make the necessary sacrifices until you can pay them back.
Rationalising expenditure does not make it go away
It doesn’t matter how much I twist the maths (“if I wear it 100 times, it’s only $3 a wear), expenditure is expenditure and must be acknowledged as such. Calling it an investment does not make things better.
The personal finance blogosphere all mention that knowing the difference between needs and wants as a major lesson of Confessions of Shopaholic. Becky’s issue is that there is no distinction between needs and wants. She thinks she needs the green scarf solely because she wants it. Asking yourself whether you need a purchase before you buy it is an effective tool at preventing unnecessary spending.
Confessions of a Shopaholic is cute, and a great reminder of what not to do. Paying off debt and resisting the lure of retail therapy are not easy, but they are the path to financial peace and quiet. And, according to the movie, they are also the path to finding our very own Luke Brandons, which can be no bad thing.